Broadband Funding – Regulation & Policy Expertise - ETI
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October 28, 2020

Broadband Funding – Regulation & Policy Expertise

 The following transcript has been edited for length and readability. Listen to the entire discussion here on The Broadband Bunch

Craig:

Welcome to The Broadband Bunch, a podcast about broadband and how it impacts all of us. Our guest today brings a wealth of experience in communications public policy. With more than three decades as a senior executive in the US government, as a consultant and as a lawyer, Carol Mattey, founder of Mattey Consulting served as deputy chief of the Wireline Competition Bureau at the Federal Communications Commission from 2010 to 2017, focusing on the FCC’s ongoing initiatives to reform over $9 billion in annual federal spending known as the Universal Service Fund, which supports broadband connectivity for rural areas, schools, libraries, healthcare providers, and low-income consumers.

Craig:

Carol is recognized as one of the nation’s leading experts on Universal Service Fund (USF) regulation and policy. She also led the development and implementation of the Connect America Fund to extend broadband to unserved areas in the United States. Earlier in her career, Carol served for five years as a policy advisor at the National Telecommunications and Information Administration in the US Department of Commerce, working on administration policies relating to early development of the internet and legislative efforts to reform the nation’s telecommunications laws leading up to the landmark ’96 Act. She is the 2016 recipient of the Federal Communications Bar Associations Excellence in Government Service award and is also a recipient of the FCC’s Gold Medal for Public Service.

The National Broadband Plan and Connect America Fund

Carol:

I spent most of my career in government, but there was an intervening five-year period where I actually went out into the private sector and was doing consulting. At the end of the day, I am a policy wonk, I really loved government and I was thrilled to go back to the FCC in 2009 to work on the national broadband plan, which then led to my staying on, and as you said in the introduction, overseeing the work to create the Connect America Fund. I decided in 2016 that I was going to leave the FCC, I had this entrepreneurial spirit in me that I wanted to try consulting again.

Carol:

I had spent so many years working with setting up the rules and policies for these government funding programs. And one of the things that was very obvious to me when I was at the FCC is that some firms are well-represented in advocacy before the FCC and are very familiar with Washington DC and what goes on in DC. But there are a lot of players out there that don’t necessarily have the same insights into how Washington works and how these programs work. And I really wanted to help those companies and those entities.

Craig:

Based on what you just shared with regard to the demand for connectivity, are there more municipalities, other groups looking to make that jump into the world of broadband?

Connect America Fund Phase II Auction

Carol:

It’s interesting to me, because as some of your listeners may know, the FCC did an auction called the Connect America Fund Phase II Action in the summer of 2018. And before that auction, I talked to various entities, made pitches to a number of entities about doing work for them. I can say the level of interest for this RDOF auction, I want to say it’s tenfold. I was literally getting calls up until the day before the applications were due, where… people were asking me if I could help them and getting inquiries from a wide cross-section. And then even after the applications were due, where recently I had a number of people that are basically what I call sort of interested advocates, communities reach out to me saying, “What can I do? What can my community do. My area isn’t eligible for the RDOF? Where do we go from here?” And I’ve had those conversations. The level of interest has been extraordinary.

Craig:

You mentioned RDOF, of course, the Rural Development Opportunity Fund, $20.4 billion, that will be distributed for projects over the next decade, that’s a substantial amount of money, but when you consider the tremendous need that’s there, it’s just a drop in the bucket, am I right?

RDOF – The Rural Development Opportunity Fund

Carol:

The $20.4 billion that the FCC has budgeted for this is not sufficient to get good broadband to all Americans, there’s going to have to be more money. And that’s clearly something that’s top of the mind. There have been a number of bills introduced in Congress in the past and at least one side in the house that would allocate a significant additional funding and I think there’s a growing consent. There’s a clear consensus, a bipartisan consensus, this is necessary. And I’m hopefully optimistic that in the coming year, there will be a bipartisan moving forward on these issues to actually appropriate additional funding to get the job done.

Craig:

You mentioned the National Broadband Plan that you were involved with, from your perspective now, where are we in the large scheme, the big picture, so to speak in that process and how much further do we have to go before we can even begin feeling comfortable about the percentage of the nation that has connectivity?

Carol:

When I go back and reread the chapter that I wrote for the national broadband plan, I can go through all of the recommendations and sort of check them off and say, “Yep, we did this. Yes, we did this. Yes, we did this.” Having said that, we’re not as far along as I’d like to be.

Building America’s Broadband Infrastructure

Carol:

There are a long list of reasons why it takes longer, it took longer, what happened along the way, and I don’t necessarily want to sort of dig into all the old history. I think one of my regrets about the national broadband plan frankly, is that it laid out an initial vision that in retrospect seems just pitifully timid and conservative in terms of what broadband would be and events in the marketplace soon made that initial goal highly unrealistic and the original vision in the national broadband plan was how are we going to get four megabits down, one megabit up to all Americans. And I just kind of laugh when I think back at that… I laugh and cry at the same time to the other.

Craig:

You made mention of the variable how business made such a huge impact on the internet and how that transformed things at lightspeed and continues to do so. From the standpoint, I know we’ve talked a little bit about funding opportunities from the federal perspective, the CAF… One CAF, two funds, the RDOF that’s going on now, the opportunities for access to dollars is not limited to the federal level. There are a number of state funding opportunities out there as well, and I’m sure that you are very involved in helping to guide your clients in that direction.

Carol:

What’s actually been good to see is in the last two, three, four years, an increasing number of states have set up not just broadband program offices, but also have set up dedicated funding grant programs. And that was not the case eight, nine years ago. There were some of the leading states that sort of thought out ahead of this issue early, like Minnesota, that obviously has the Border-to-Border Grant Program, but in more recent years in the last couple of years, more and more states are setting up programs and having dedicated grant funding, which is supplementing what’s going on at the federal level and is sorely needed. States obviously are in an excellent position to identify particular areas within their state that need assistance. And they’re closer to the ground and are able to sort of provide targeted funding that can supplement what’s available at the federal level, whether it’s from the FCC or other federal programs.

Craig:

And you make mention of other federal programs, there have been a number of fast track programs. For example, I assume the CARES Act would qualify in that category.

The CARES Act – Grants for Broadband

Carol:

The CARES Act, obviously it has appropriated money to various states. And my understanding is states had some discretion in what they could do with the money, but a number of states actually took that money and set up on a really rapid turnaround basis, funding programs to provide grants infrastructure. And I believe it’s under the federal law. There’s a requirement that those projects have to be completed by the end of the year. But that gets back to my point that the states were in a position where they were able to do that, particularly to the extent they had already been looking at this issue and increasingly becoming aware of how there was such a critical need to move quickly during the pandemic.

Craig:

When we look at opportunities that exist for reaching those who are underserved unserved, there are many organizations that have been successful in the acquisition of CAF funds in the past, those that will be successful in the RDOF funds, but with any program, there are stipulations that come with a successful bid for funding and being able to meet the regulatory compliance is a part of the process. It’s not just, “Here’s your check, have a good day.” But, “Here’s your check and here are the thresholds that must be met down the road.” If you would talk a little bit about the challenges of making sure that the organizations that have been successful in getting funds meet those requirements?

Carol:

I should preface this by saying both the Connect America Fund, Phase II Auction, as well as this upcoming Rural Digital Opportunity Fund Auction. For both, there was and it is a two-part application process. First you have to apply to bid in the auction. And then if you were a winning bidder, there is a more detailed application process at the FCC and other specific requirements that you have to meet. Once the entity, the organization is authorized to receive funding, then big picture, there’s a variety of requirements, but big picture, I put them in several buckets. One, is the funding recipients have an obligation to complete their deployment within six years with interim milestones along the way and consequences for non-compliance. They have an ongoing annual requirement to report newly deployed locations to the FCC’s fund administrator, which is an entity known as the Universal Service Administrative Company (USAC).

Carol:

There also is an obligation to perform what’s known as speed and latency testing, and that’s intended to validate that whatever speed and latency the winning bidder, the authorized entity committed to provide actually is being provided. And again, there are consequences for non-compliance with that. And then last but not least, there’s an overall annual reporting requirement where companies have to provide certain information to USAC. And that’s used just big picture in terms of how USAC and ultimately the FCC is ensuring that companies are living up to their obligations. And that’s one of the more significant changes compared to the regime that existed before we undertook this comprehensive reform back in the 2011 timeframe. Prior to that time, companies were receiving money and there were no measurable metrics by which they had to perform and there was no specific expectation and no looking hard to see what they were doing with the money.

Reaching Measurable Broadband Metrics

Carol:

They had that sort of general, you’re supposed to be using the money properly, but there was nothing concrete. We’ve got a very, very different system now, where there is essentially a third party that’s validating and actually doing audits to verify that deployment occurred and that service is being offered and provided to consumers. And that’s important because that’s what you want. You want to know that you’re getting value for the government expenditure of funds.

Craig:

That’s a perfect segue into the component of any of the qualifications for these programs being contingent in large part on the map, if you will, of the intended service areas being unserved, underserved, and the importance of existing data that would show whether or not an area has been considered to be served in the past, much concern over the veracity of numbers generated by the 477 reports twice a year. But we are seeing progress, in coming up with more accurate data to show truly who is being served, those that are not, and being able to focus those funding dollars in the right direction. True?

Digital Broadband Mapping

Carol:

I would say the FCC has finally moved forward on its ongoing proceeding called the Digital Opportunity Data Collection to adopt new rules to basically collect more granular data about the availability of broadband. But the problem there is the FCC has repeatedly told Congress that it does not have sufficient funding to actually implement the requirements of the Broadband DATA Act. So the way to think about it as the FCC has sort of… They’ve gone through a rule-making process and they’ve made decisions as to what they’re going to do, but they’re not actually currently actively working to fix the maps. And they’re telling Congress they need additional funding to be able to do that.

Carol:

I’m extremely hopeful that Congress will appropriate funding to the FCC that will give them the actual dollars they need, and the reason… And you may ask, “Why does the FCC need funding to do this?” This is a massive undertaking and you actually have to hire contractors and do other things to do a proper job of updating the maps and making the more specific granular information available. So that’s why the FCC needs the funding.

Carol:

The FCC is moving along, but I cannot say that we will have the accurate national maps within the next six months, whereas some of the states, just off the top of my head, like Georgia is an example of a state that chose to do it. And basically Georgia found out that the actual service unavailability was like twice as high as what the FCC map show. And that just proves the point that the current FCC maps have significant inaccuracies in them and more work needs to be done.

Craig:

Let’s look at the Microsoft effort last year that showed that virtually half of the nation, approximately 162 million people have no connectivity.

Carol:

There you have to keep in mind what Microsoft was doing was actually tracking usage as opposed to availability. And in other words, that Microsoft study was that customers, 163 million or whatever the number was, were not using broadband at that speed. That does not tell you as to whether it was available or not. It really was tracking like of the people that were actually using connectivity, what speeds were they? But it’s an additional data point that clearly reinforces the notion that more than half of Americans are not using broadband at the speed levels the FCC defines as broadband.

Broadband Speed, Bandwidth & Latency

Craig:

You also mentioned earlier something that most people don’t consider, everyone’s obsessed with speed and bandwidth, but what about latency? That is something that affects the online experience dramatically.

Carol:

That’s true. And another thing to think about is pricing. Obviously, there can be areas where broadband is available but it may be at a price point that does not create widespread adoption, and that can be due to a variety of reasons, but that’s another dimension of the problem in terms of what does it cost to even have services available?

Craig:

I don’t imagine been a time where there is a greater need to connect everyone from the standpoint of telehealth, distance work, the virtual learning that’s required in this current pandemic situation, but how things have gotten to the point where even applying for a job at a fast food institution requires online access. If you were to look down the road five years, 10 years, what do you see as the progress that will have been made in that timeframe?

Carol:

I definitely think we’re going to make significantly more progress in the next five years compared to say the last five. And sadly the pandemic is just putting it in sharp focus and creating a greater resolve and purpose. And the reason why I say sadly, I’m sad that it took a pandemic to sort of kickstart the process, but I think maybe that’s… Looking at the bright side, maybe that’s a good thing, because it will actually accelerate things that have been taking a long time and need to happen faster.

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Priscilla Berarducci - Sales and Marketing Coordinator

Priscilla manages digital content and supports sales/marketing efforts for ETI. She also serves as brand manager for the Broadband Bunch podcast where she books industry professionals who want to share their broadband stories.